Source - LSE Regulatory
RNS Number : 9573D
Chamberlin PLC
21 February 2024
 

21 February 20Chamberlin Logo24

AIM: CMH

 

CHAMBERLIN PLC

("Chamberlin" or "the Company" or "the Group")

 

Interim Results

for the six months ended 30 November 2023

 

Chamberlin plc (AIM: CMH) is pleased to announce its interim results for the six months ended 30 November 2023 ("H1 2024").

 

Key Points

 

·            Revenue of £10.6m (H1 2023: £10.5m), an increase of 6%

 

·            Underlying operating profit of £0.1m (H1 2023: £0.1m loss) reflecting 192% increase from prior period

 

·            Profit after tax of £47,000 (H1 2023: £0.3m loss)

 

Post Period

 

·            Conditional sale of Petrel Limited ("Petrel") announced today for gross proceeds of £3.0m

 

Chairman, Keith Butler-Wheelhouse, commented: 

 

"Performance in the first half has been broadly in line with the Board's expectations. The sale of Petrel will provide the Group with the financial resources and balance sheet strength that it needs to focus on its core iron foundry and machining operations and for both businesses to pursue their respective strategies with greater impetus."

 

 

Enquiries

 

Chamberlin plc

Kevin Price, Chief Executive Officer

Alan Tomlinson, Finance Director


T: 01922 707100

 

 



Cavendish Capital Markets Limited

(Nominated Adviser and Joint Broker)

Katy Birkin

Stephen Keys

George Lawson


T: 020 7220 0500




Peterhouse Capital Limited (Joint Broker)

Lucy Williams

Duncan Vasey

 


T: 020 7469 0930



 

 



Chief Executive's Statement

 

Revenues in the first half increased by 6% to £10.6m (2023: £10.5m), largely driven by new orders won at Chamberlin and Hill Castings' ("CHC") machining facility in the final quarter of the previous financial year. Revenues in the Foundry division at CHC and Russell Ductile Castings ("RDC") and in the Engineering division at Petrel have remained broadly in line with the elevated levels seen in the corresponding period last year.

 

Underlying operating profit of £0.1m (2023: £0.1m loss) included a £0.2m profit from the sale and leaseback of the Group's property in Walsall, which completed in June 2023. Excluding the profit from the property transaction, the underlying operating loss reduced by 46% compared to last half year, as gross margin moved ahead slightly to 14.0% (2023: 13.6%) and overhead costs remained tightly controlled. In the Foundry division, RDC improved its operating profit by 43% compared to last half year as a result of operational efficiencies from the investment in additional capacity and favourable market conditions. Operating performance at CHC lagged behind expectations due to the slower than anticipated commencement of production of new programs and the costs of ramping up production at the machining facility from a standing start but this temporary trend is expected to reverse in the second half and operating performance is expected to improve. Petrel's profitability was slightly below last half year as overhead costs marginally increased to support its strategy of expansion in overseas markets.

 

Following continued expectations of further operational improvement at CHC's machining facility in the light of new orders secured, an exceptional operating credit of £0.2m has been recognised in the first half relating to the reversal of a previous impairment of the machinery. The net interest cost of £0.4m (2023: £0.2m) largely reflects the full impact of successive increases in the Bank of England base rate. Loss before tax of £0.1m (2023: £0.1m) reflected an 83% improvement in actual terms compared to the prior period and, after a tax credit of £0.1m, profit after tax was £47,000 (2023: £0.3m loss).

 

In January 2024, Chamberlin completed a placing and subscription raising £830,000 before costs to support the Group's working capital requirements as it continues to deliver the Group's growth strategy and to strengthen the Group's balance sheet.

 

On 21 February 2024, the Board announced that it had entered into an agreement for the conditional sale of Petrel to Project Apollo Limited (the "Purchaser"), a subsidiary of Longacre Group, for a total gross cash consideration of £3.0 million. Further details regarding the sale are included in that announcement.

 

The triennial valuation of the Group's defined benefit pension scheme was successfully completed in June 2023. The actions that have been taken by the Board to improve the funding of the scheme, together with favourable market movements, have led the deficit to reduce on a Trustees' basis from £5.5m in March 2019 to around £1.2m following the payment of £1.1m to the scheme on completion of the property sale and leaseback in June 2023. This £1.1m contribution resulted in the deficit in the Group balance sheet at 31 May 2023 of £0.6m becoming a surplus of £0.1m at 30 November 2023. The payment of £0.85m to the scheme resulting from the sale of Petrel will further improve the pension scheme surplus on the Group balance sheet and reduce the deficit on a Trustees' basis to around £0.4m.

 

Outlook

 

The sale of Petrel Ltd will provide the Group with the financial resources and balance sheet strength that it needs to focus on its core iron foundry and machining operations and for both businesses to pursue their respective strategies with greater impetus. The transaction proceeds are expected to both reduce the Group's liabilities by around £2.6m and contribute an exceptional profit of no less than £2.0m, in FY24.

 

The Board believes that this is the start of an exciting new chapter for the Company as it moves forward with improved working capital resources to invest in the development of steel production at RDC and spheroidal graphite iron production at CHC. With existing order books at RDC and CHC expected to drive improvement in operational performance in the second half and beyond, prospects for sustainable growth, that will replace the lost profits from Petrel, are achievable over the short to medium term.

 

 

Kevin Price

Chief Executive

 

 

Consolidated Income Statement

for the six months ended 30 November 2023

 

 

 

 

 











Note

Unaudited
six months ended
30 November 2023

Unaudited
six months ended
30 November 2022

Year ended
31 May 2023



Underlying

# Non-underlying

       Total

Underlying

# Non-underlying

Total

Underlying

# Non-underlying

        Total



£000

£000

£000

£000

£000

£000

£000

£000

£000












Revenue

2

10,611

-

10,611

10,544

-

10,544

20,718

-

20,718

Cost of sales


(9,118)

-

(9,118)

(9,104)

-

(9,104)

(17,892)

-

(178928)

Gross profit


1,493

-

1,493

1,440

-

1,440

2,826

-

2,826

Other operating expenses

7

(1,362)

182

(1,180)

(1,583)

(140)

(1,723)

(3,413)

1,155

(2,258)

Operating profit/(loss)


131

182

313

(143)

(140)

(283)

(587)

1,155

568

Interest receivable

Finance costs

 

3

144

(535)

-

-

144

(535)

29

(213)

-

-

29

(213)

136

(666)

-

-

136

(666)

(Loss)/profit before tax


(260)

182

(78)

(327)

(140)

(467)

(1,117)

1,155

38

Tax credit/(expense)

4

125

-

125

186

-

186

180

(343)

(163)

Profit/(loss) for the period attributable to equity holders of the Parent Company


(135)

182

47

(141)

(140)

(281)

(937)

812

(125)

 

 

Earnings/(loss) per share:

 











Basic

5


 

0.03p



(0.3)p



(0.1)p

Diluted



 

0.03p



(0.3)p



(0.1)p


































# Non-underlying items include restructuring costs, reversal of  impairment of assets, and share-based payment costs together with the associated tax impact.

 



 

 

Consolidated Statement of Comprehensive Income

for the six months ended 30 November 2023

 

 

 


Unaudited
six months ended
30 November
2023

Unaudited
six months ended
30 November
2022


Year ended
31 May
2023



£000


£000


£000








Profit/(loss) for the period


47


(281)


(125)

Other comprehensive income







Movements in fair value of cash flow hedges taken to other comprehensive income


-


3


5

Recycled to the income statement


(2)


-


(135)

Deferred tax on movements in cash flow hedges


-


(1)


32

Net other comprehensive (expense)/income that may be recycled to profit and loss


(2)


2


(98)

 

Re-measurement losses on pension scheme assets and liabilities


 

(365)


 

(880)


 

(1,073)

Deferred tax on re-measurement losses on pension scheme assets and liabilities

 


91


167


204

Net other comprehensive expense that will not be reclassified to profit and loss


(274)


(713)


(869)

 

Other comprehensive expense for the period net of tax

 


(276)


(711)


(967)

Total comprehensive expense for the period attributable to equity holders of the Parent Company


(229)

 


 

(992)


 

(1,092)

 



 

 

Consolidated Balance Sheet

at 30 November 2023

 

 

 



Unaudited
30 November
2023


Unaudited
30 November
2022


31 May
2023



£000


£000


£000

Non-current assets







  Property, plant and equipment


4,949


3,525


5,235

  Intangible assets


106


263


127

  Deferred tax assets


1,409


1,621


1,173

  Defined benefit pension scheme surplus


80


-


-



6,544


5,409


6,535

Current assets







  Inventories


3,282


3,449


3,262

  Trade and other receivables


5,440


4,955


4,506

  Income tax receivable


165


-


286

  Cash at bank


184


124


157



9,071


8,528


8,211

Total assets


15,615


13,937


14,746








Current liabilities







  Financial liabilities


4,725


3,873


4,096

  Trade and other payables


7,069


7,281


7,572



11,794


11,154


11,668

Non-current liabilities







  Financial liabilities


2,835


1,814


1,602

  Deferred tax liabilities


64


60


40

  Provisions


806


806


806

  Defined benefit pension scheme deficit


-


634


639



3,705


3,314


3,087








Total liabilities


15,499


14,468


14,755








Capital and reserves







  Share capital


2,119


2,088


2,107

  Share premium


7,210


6,332


6,882

  Capital redemption reserve


109


109


109

  Revaluation reserve


1,003


1,003


1,003

  Hedging reserve


-


102


2

  Retained earnings


(10,325)


(10,165)


(10,112)

Total equity


116


(531)


(9)








Total equity and liabilities


15,615


13,937


14,746



 

 Consolidated Cash Flow Statement

for the six months ended 30 November 2023



Unaudited
six months ended
30 November
2023


Unaudited
six months ended
30 November
2022


Year ended
31 May
2023



£000


£000


£000

Operating activities







Loss for the period before tax


(78)


(467)


38

Adjustments for:







Interest receivable

Net finance costs


(131)

522


(29)

213


(136)

666

Impairment reversal on property, plant and equipment, inventory and receivables


 

(200)


 

-


 

(1,372)

Dilapidations provision


-


-


-

Depreciation of property, plant and equipment


295


186


436

Amortisation of intangible assets


17


20


39

Profit on disposal of property plant and equipment

Foreign exchange rate movements


(208)

(2)


-

(6)


-

(140)

Share-based payments


18


34


99

Defined benefit pension contributions paid


(1,206)


(180)


(362)

Increase in inventories


(20)


(307)


(303)

Increase in receivables


(1,006)


(796)


(499)

(Decrease)/increase in payables


(270)


830


1,000

Corporation tax received


121


306


306

Net cash outflow from operating activities


(2,148)


(197)


(228)








Investing activities







  Purchase of property, plant and equipment


(89)


(205)


(410)

  Purchase of software


-


-


(5)

  Development costs

  Disposal of property, plant and equipment


-

2,200


-

-


(10)

-

  Interest received


118


29


128








Net cash inflow/(outflow) from investing activities




(297)








Financing activities







  Interest paid


(522)


(215)


(567)

  Net invoice finance drawdown/(repaid)


498


1,047


1,297

  New share capital issued


310


-


594

  Finance lease payments


(340)


(337)


(642)

 

Net cash (outflow)/inflow from financing activities


 

(54)


 

497


 

682








Net increase in cash and cash equivalents


27


124


157








Cash and cash equivalents at the start of the period

Impact of foreign exchange rate movements


 

157

-


 

-

-


 

-

-








 

Cash and cash equivalents at the end of the period

 


 

184


 

124


 

157















Cash and cash equivalents compromise:







 

Cash at bank


 

184


 

124


 

157

 

 

 

 

 

 

 

 

Consolidated Statement of Changes in Equity

for the six months ended 30 November 2023


Share capital

Share premium

Capital redemption reserve

Hedging reserve

 

Revaluation reserve

Retained earnings

Total equity










£000

£000

£000

£000

£000

£000

£000

At 1 June 2022

2,087

6,308

109

100

 

1,003

(9,199)

408

Loss for the period

-

-

-

-

 

-

(281)

(281)

Other comprehensive income/(expense) for the period net of tax

-

-

-

2

-

(713)

(711)

Total comprehensive income/(expense)

-

-

-

2

-

(994)

(992)

New share capital issued

1

24

-

-

-

-

25

Share-based payments

-

-

-

-

-

34

34

Deferred tax on share-based payments

-

-

-

-

-

(6)

(6)

Total of transactions with shareholders

1

24

-

-

 

-

28

53

At 30 November 2022

2,088

6,332

109

102

 

1,003

(10,165)

(531)









Profit for the period

-

-

-

-


156

156

Other comprehensive expense for the period net of tax

-

-

-

(100)

-

(156)

(256)

Total comprehensive expense

-

-

-

(100)

 

-

-

(100)

New share capital issued

19

550

-

-

 

-

-

569

Share-based payments

-

-

-

-

 

-

65

65

Deferred tax on share-based payments

-

-

-

-

 

-

(12)

(12)

Total of transactions with shareholders

19

550

-

(100)

 

-

53

622

At 1 June 2023

2,107

6,882

109

2

 

1,003

(10,112)

(9)









Profit for the period

-

-

-

-

 

-

47

47

Other comprehensive expense for the period net of tax

-

-

-

(2)

 

-

(274)

(276)

Total comprehensive expense

-

-

-

(2)

 

-

(227)

(229)

New share capital issued

12

328

-

-

 

-

 

-

340

Share-based payments

-

-

-

-


18

18

Deferred tax on share-based payments

-

-

-

-


(4)

(4)

Total of transactions with shareholders

12

328

-

-

 

-

14

358

At 30 November 2023

2,119

7,210

109

-

 

1,003

(10,325)

116

 

 

Notes to the Interim Financial statements

 

1          General information and accounting policies

 

The unaudited interim condensed consolidated financial statements do not comprise the Group's statutory accounts as defined by section 434 of the Companies Act 2006.  Statutory accounts for the year ended 31 May 2023 were approved by the Board of Directors on 30 November 2023 and filed at Companies House.  The auditor's report on those accounts was unqualified but contained an emphasis of matter paragraph relating to a material uncertainty regarding going concern.  

 

Basis of preparation

 

The Group's financial statements have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006.

 

The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with AIM Rules issued by the London Stock Exchange.

 

Accounting policies

 

The principal accounting policies applied in preparing the interim Financial Statements comply with IFRS as adopted by the European Union and are consistent with the policies set out in the Annual Report and Accounts for the year ended 31 May 2023.

 

No new standards or interpretations issued since 31 May 2023 have had a material impact on the financial statements of the Group.

 

Going concern

The Director's assessment of going concern is based on the Group's detailed forecast for the two years ending 31 May 2024 and 31 May 2025, which reflect the Director's view of the most likely trading conditions. Since the balance sheet date, Chamberlin plc has entered into a conditional contract for the sale of Petrel Limited that will generate gross proceeds of £3.0m on completion.

 

The forecast includes revenue growth assumptions across all of the Group's businesses. At Chamberlin and Hill Castings, these assumptions are based on secured orders and programs and are based on customer estimates of future demand and historical run rates. At Russell Ductile Castings, the forecasts assume that revenue growth will be derived from work recently won for new customers following the demise of a competitor foundry and are based on customer estimates of future demand and expected run rates. At Petrel, revenue growth assumptions are based on the introduction of new or upgraded products and a strategic drive to increase export sales.

 

The Directors have applied reasonably foreseeable downside sensitivities to the forecast, including an assumption that sales growth in the two largest businesses, namely Chamberlin and Hill Castings and Russell Ductile Castings, are both 20% lower than expectations. Furthermore, the Group is reliant on an invoice finance facility to fund its working capital needs. The renewal of the facility at the next annual review in March 2024 cannot be guaranteed, although there are no indications at the date of the approval of the financial statements that a renewal with the existing provider would not be granted or that alternative providers could not be found. The Directors have considered how they will respond to any working capital challenges bearing in mind the points raised above.  Firstly the business constantly looks at cost minimisation and that process could be accelerated if required. Secondly, if access to alternative debt funders were not successful in the short term, the business will consider other funding options, including equity, to support working capital requirements.

 

As a consequence, after making enquiries, the Directors have an expectation that, in the circumstances of the reasonably foreseeable downside scenarios described above, the Group and Company have adequate resources to continue in operational existence for the foreseeable future.

 

However, the rate at which revenue growth can be achieved during a potentially future recessionary period and uncertain global trading conditions is difficult to predict. Furthermore, the ability to renew or source alternative invoice finance facilities results in material uncertainty, which may cast significant doubt over the ability of the Group and the Company to realise its assets and discharge its liabilities in the normal course of business and hence continue as a going concern.

 

The Directors continue to adopt the going concern basis, whilst recognising there is material uncertainty relating to the above matters.

 

2              Segmental analysis

 

For management purposes, the Group is organised into two operating divisions: Foundries and Engineering. The operating segments reporting format reflects the Group's management and internal reporting structures for the Chief Operating Decision Maker.

 


Revenue

Operating (loss)/ profit


Unaudited

 six months

ended

30 November

2023

 

£000

Unaudited

six months

ended

30 November

2022

 

£000

 

Year ended

31 May

2023

 

£000

Unaudited

six months

ended

30 November

2023

 

£000

Unaudited

six months

ended

30 November

2022

 

£000

 

Year ended

31 May

2023

 

£000








Foundries

8,649

8,600

16,889

68

(9)

(210)

Engineering

1,962

1,944

3,829

327

343

606

Segmental results

10,611

10,544

20,718

395

334

396

Shared costs




(264)

(477)

(983)

Non-underlying items (Note 7)




182

(140)

1,155

Net finance costs




(391)

(184)

(530)

(Loss)/profit before tax




(78)

(467)

38

 

The Foundries segment is a supplier of iron castings, in raw or machined form, to a variety of industrial customers who incorporate the castings into their own products or carry out further machining or assembly operations on the castings before selling them on.  The Engineering segment provides manufactured hazardous area lighting products to distributors and end-users.

 

Financing and income tax are managed on a Group basis and are not allocated to operating segments.

 

 

3              Finance costs


Unaudited
six months ended
30 November

2023

Unaudited
six months ended
30 November

2022

Year ended
31 May

2023


£000

£000

£000

Bank overdraft and invoice finance interest payable

(321)

(127)

(365)

Interest expense on lease liabilities and other interest payable

(214)

(86)

(301)


(535)

(213)

(666)

 

                                                                                                                                                                                               

 

4              Income tax expense

 

An estimated effective rate of tax for the six months to 30 November 2023 of 160.3% (30 November 2022: 39.8%) has been used in these interim statements. This rate differs to the standard corporation tax rate of 25% due primarily due to the recognition of a deferred tax asset on certain trading losses, accelerated capital allowances, research and development credits and short-term timing differences. The corporation tax rate was 19% for the year ended 31 May 2023 and is expected to be 25% for the year ended 31 May 2024.

 

5              Earnings/(loss) per share

 

The calculation of earnings/(loss) per share is based on the profit/(loss) attributable to shareholders and the weighted average number of ordinary shares in issue. In calculating the diluted loss per share, adjustment has been made for the dilutive effect of outstanding share options where applicable. Underlying earnings/(loss) per share, which excludes non-underlying items and the related tax thereon as disclosed in Note 7, as analysed below, has been disclosed as the Directors believe this allows a better assessment of the underlying trading performance of the Group.

 


Unaudited

six months ended

30 November

2022

Unaudited

six months ended

30 November

2021

Year ended

31 May

2022


£000

£000

£000

Profit/(loss) after tax for basic earnings per share

47

(281)

(125)

Non-underlying operating items

(182)

140

(1,155)

Taxation effect of the above

-

-

343

 

Loss for underlying earnings per share

 

(135)

 

(141)

 

(937)

 













 

 

 

Unaudited

six months ended

30 November

2023

Unaudited

six months ended

30 November

2022

 

Year ended

31 May

2023


000

000

000

Weighted average number of ordinary shares

137,723

105,625

112,603

Adjustment to reflect dilutive shares under option

3,688

3,581

1,888

 

Diluted weighted average number of ordinary shares

 

141,411

 

109,206

 

114,491

 

There is no adjustment for the shares under option in the diluted loss per share calculation for the six months ended 30 November 2022 and year ended 31 May 2023 as they are required to be excluded from the weighted average number of shares as they are anti-dilutive.

 

 

6              Pensions

 

The Group operates a defined benefit pension scheme and a defined contribution pension scheme on behalf of its employees. For the defined contribution scheme, contributions paid in the period are charged to the income statement.  For the defined benefit scheme, actuarial calculations are performed in accordance with IAS 19 in order to arrive at the amounts to be charged in the income statement and recognised in the statement of comprehensive income.  The defined benefit scheme is closed to new entrants and future accrual.

 

Under IAS 19, the Group recognises all movements in the actuarial funding position of the scheme in each period.  This is likely to lead to volatility in shareholders' equity from period to period.

 

The IAS 19 figures are based on a number of actuarial assumptions as set out below, which the actuaries have confirmed they consider appropriate.  The projected unit credit actuarial cost method has been used in the actuarial calculations.

 


30 November

2023

30 November

2022

31 May

2023





Salary increases

n/a

n/a

n/a

Pension increases (post 1997)

3.0%

3.1%

3.0%

Discount rate

5.2%

4.5%

5.4%

Inflation assumption - RPI

3.1%

3.1%

3.1%

Inflation assumption - CPI

2.5%

2.4%

2.5%

 

The demographic assumptions used for 30 November 2023 were the same as those used at 31 May 2023, and were based on the last full actuarial valuation performed as at 31 March 2022. The contributions expected to be paid during the year to 31 May 2024 are £409,000. The next triennial valuation is due as at 31 March 2025.

 

The defined benefit scheme funding has changed under IAS 19 as follows:

 

 

 

Funding status

           Unaudited

30 November

2023

£000

             Unaudited

 30 November

2022

£000

 

31 May

2023

£000

Scheme assets at end of period

 

11,847

11,924

11,000

Benefit obligations at end of period

(11,767)

(12,558)

(11,639)

Surplus/(deficit) in scheme

80

(634)

(639)

Related deferred tax (liability)/asset

(20)

159

160

Net pension asset/(liability)

60

(475)

(479)





The change in the net pension liability since 31 May 2023 is mainly due to the additional employer contribution of £1.1m partially offset by negative investment returns arising from a fall in the market value of scheme assets and an increase in the value of liabilities as a consequence of a reduction in bond yields reducing the discount rate.

 

 

7              Non-underlying items

 

 

 

Unaudited

six months ended

30 November

2023

Unaudited

six months ended

30 November

2022

 

Year ended

31 May

2023



£000

£000

£000


Group reorganisation

-

106

118


Reversal of impairment of property, plant & equipment

(200)

-

(1,372)


Share-based payment charge

18

34

99


Non-underlying operating income/(costs)

(182)

140

(1,155)


Taxation




- tax effect of non-underlying costs

-

-

343






(182)

140

(812)

 

In the six months ended 30 November 2023, the Group reversed £200,000 of the impairment to property, plant and equipment in the foundry division's machining facility following improved performance and prospects.

 

 

8              Net debt

 

 

 

Unaudited

30 November

2023

Unaudited

30 November

2022

 

31 May

2023


£000

£000

£000

Current financial assets/(liabilities)




Net cash

184

124

157

Lease liabilities

(689)

(580)

(554)

Invoice finance liability

(4,036)

(3,293)

(3,542)

Net debt due in less than one year

(4,541)

(3,749)

(3,939)





Lease liabilities due in more than one year

(2,835)

(1,814)

(1,602)





Net debt

(7,376)

(5,563)

(5,541)

 

 

 

9              Interim report

 

This interim results statement is available on the Group's website, www.chamberlin.co.uk.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR EAFAFADFLEFA
Find out how to deal online from £1.50 in a SIPP, ISA or Dealing account. AJ Bell logo

Related Charts

Chamberlin PLC (CMH)

0p (0.00%)
delayed 04:00AM